How is Nifty looking like on the charts given the kind of range-bound session that we have been witnessing for the last few sessions? Do you think that is likely to continue?

Yes, we have seen that during the expiry day. The momentum was quite positive on Nifty as well as Bank Nifty but that was major in the last half-an-hour. The followup move was more important than what happened in last half-an-hour in Thursday’s session.

We believe that there was no followup buying momentum in Friday’s trading session and if we see the stock specific momentum, then there is a clear divergence between the midcap space and the largecap space. While some of the largecaps such as auto stocks have shown a good momentum with buying interest, the midcap index is continuously indicating that the underperformance is likely to continue maybe next week as well.

Since largecap is showing strength. Nifty and Bank Nifty index would not see any sharp selloff. We would rather see a range-bound activity next week wherein 10,550 to 10,600 range would act as a support and today’s high of around 10,765 would be a resistance.

The next set of directional move in index would depend on where the breakout is. Whether we give a breakout above 10,800 first or breached 10,550 first. As of now, it seems that 10,550 to 10,800 would be the broad range in which index would trade during next week as well.

How are you looking at Bank Nifty because that is one sector which has been reeling under tremendous pressure. There has always been concerns of the NPA stress and the asset quality lowering profits. There is also a lot of news flow coming in from the private banking space. Given all the backdrop and the volatile moves that we have seen, how is it looking on the charts from the current levels?

The higher top higher bottom structure on the daily chart on Bank Nifty is getting continued and even in yesterday’s session we saw certain heavyweights such as HDFC Bank and Kotak Bank continuously showing good strength. The upmoves have been supported by very good volumes.

In spite of some corrective move in today’s trading session, the broader trend continues to remain positive for the Bank Nifty and in any kind of declines, 26,500-26,600 would be the range, where this index would take a support and resume its broader uptrend. One should go for a buy-on-dips strategy. Any kind of decline should be used as an opportunity in the banking space. Within this sector, the index heavyweights have been showing good outperformance. There are volumes in heavyweights such as IndusInd Bank, HDFC Bank and Kotak Bank.

I think traders should stick to those names since the outperformance is likely to continue going ahead also.

What are your picks?

I have a couple of buy recommendations and a sell recommendation. From a trading perspective, the core analysis where short-term trader should look is to buy the stocks which are showing outperformance and sell those stocks which are showing underperformance.

Maruti is one of the stock where we expect an upmove. On the weekly charts, the prices have shown a reversal pattern and this week we have seen a followup momentum with good volumes. Trades can buy with a stop below Rs 8640, expecting target around Rs 9115.

Cholamandalam Investment is the other stock which continuously has been forming higher-top higher-bottom structure on the weekly and the monthly chart.

The recent corrective phase has been backed with very low volumes compared to what volumes we usually see when the stock prices go up. So, traders can buy Cholamandalam with stop below Rs 1540, for target around Rs 1650.

Cummins India is one of the stocks that we have a short recommendation on simply because of its underperformance in last few months. Now when the markets are showing corrective phase within the midcap basket, this underperformance is likely to continue. One can sell Cummins with a stop of above Rs 705, for target around Rs 655 and all these picks are from next one week’s perspective.